CPS Energy bonds earn $262 million, achieve millions in savings

09/24/2014

News

CPS Energy sold $262.5 million of its electric and gas systems junior lien revenue refunding bonds in New York this week.

Proceeds from the sale will be used to refund bonds previously issued in 2005, resulting in net present value savings of $35.9 million.

“Our tax-exempt bonds were incredibly well received in the market, with the demand for the bonds being four times greater than our supply,” stated Chief Financial Officer Paula Gold-Williams. “With this much interest in the 2016 and 2020 maturities, CPS Energy was able to reduce the interest rate on the bonds, which will result in significant debt service savings for our customers.” She explained that “today’s successful sale of the bonds is attributed primarily to our high credit ratings and financial strength.”

In addition to the solid commentary included in recent reports from the three major Credit Ratings Agencies, CPS Energy’s junior lien bonds were rated as follows:

Fitch Ratings Inc.: “AA+”

Moody’s Investor Service: “Aa2”

Standard & Poor’s: “AA-”

Within the Moody’s report, Senior Vice President, Dan Aschenbach, noted, “The high grade long-term credit rating is based on the utility’s strong service area economy which includes the City of San Antonio (Aaa), the nation’s 7th largest city; the utility’s significant competitive retail rate advantage, its reliable and diverse power supply, conservative financial record, and the sound debt structure and risk management program.”

Theodore Chapman, director of the U.S. Public Finance Infrastructure Group at Standard & Poor’s, commented in his firm’s report that the rating was supported by several factors, including CPS Energy’s “deep and diverse service area economy that remains one of the healthiest in Texas, and San Antonio’s city council has demonstrated its support of CPS’ strong financial risk profile by approving rate increases as needed.”

Fitch Ratings’ Senior Director, Kathy Masterson, concluded, “CPS is in the process of reinvesting in its generation portfolio to include more renewable generation and to replace older coal-fired resources with lower emission gas-fired generation and energy efficiency programs.” She added that “Electric rates are low for the region. CPS offers the community highly competitive power prices.”